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THE Ackerman family, which founded South Africa’s Pick n Pay will relinquish control of the struggling retailer as part of a revamp aimed at stemming losses, cutting debt and regaining market share.
Gareth Ackerman will also retire as chairman after 14 years in the job and 40 years at the company, though he will stay on to support management until next year’s annual results.
New CEO, Sean Summers is tasked with reviving a business that has been losing market share to bigger rival Shoprite.
Founded by Raymond Ackerman in 1967, Pick n Pay was once South Africa’s largest retailer, but “inappropriate strategic initiatives” over the last decade failed to prevent profit declines in the core business, Gareth Ackerman said on Monday.
This led the group, whose crown jewel is discount grocery chain Boxer, to report a comparable loss before tax and capital items of R1,67 billion (US$91 million) in the year ended February 25, from a profit of R1,8 billion the year before.
Summers announced a two-step recapitalisation plan earlier this year that includes a rights issue to raise up to R4 billion and Boxer’s listing in order to cut the group’s R6,1 billion debt and help fund its new strategy.
Ackerman Investment Holdings (AIH) supports the plan and will invest up to R1,025 billion in the rights offer.
But AIH and related persons have also agreed to forgo control of Pick n Pay, such that their voting rights will fall slightly below 50 percent after the planned offer, the company added.
AIH will also relinquish the right to nominate the chair, CEO and finance chief, and the Ackerman family’s representation on the board of directors will reduce to three members from four.
“We need new blood and ideas,” Gareth Ackerman said.
Chief financial officer, Lerena Olivier told investors, the retailer needed about R10-R12 billion of capital, with R6-8 billion projected to come from the Boxer listing.
Under Summers’ new plan, over 100 loss-making Pick n Pay supermarket stores will be closed or converted to Pick n Pay franchise or Boxer stores, resulting in about R850 million of savings.
He said he expected the core Pick n Pay business to break-even in its 2027 financial year and would also revamp the company’s operating model, with about R1,3 billion of cost cuts targeted over the next three years.
“It’s not a race to see who can have the most stores. Retail is not about having the most stores, it’s about, which stores and where and for us it’s going to be a flight to quality not quantity,” Summers said. —Reuters
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